Do You Usually Adjust Your Withholding to Get a Bigger Tax Refund?

Financial Horizons: Insights for Building Wealth and Securing Your Legacy 

By Dr. Jose G. Cardenas, Chief Tax Strategist at The C & R Group, LLC

When it comes to taxes, many people wonder whether it’s better to receive a big refund at tax time or keep more money in their paycheck throughout the year. The answer depends on your financial habits, goals, and overall tax strategy. Let’s break down the options.

Option A: Adjust Withholding for a Large Refund

For many taxpayers, a refund feels like a bonus. It can be used to pay down debt, fund savings goals, or even splurge.
✅ Pro: Built-in forced savings plan.
❌ Con: You’ve given the government an interest-free loan all year.

Option B: Lower Withholding to Keep More Money During the Year

Instead of waiting for a refund, you can adjust your W-4 to keep more of your money in each paycheck.
✅ Pro: More monthly cash flow for savings, investments, or expenses.
❌ Con: If not managed properly, you could owe at tax time.

Option C: Not Sure How to Adjust Withholding

If you’re uncertain, you’re not alone. Many taxpayers don’t realize they can control their withholding by filing an updated W-4 form with their employer.
✅ Pro: Flexibility—you can make changes anytime.
❌ Con: Lack of planning may result in unexpected tax bills or missed savings opportunities.

Option D: Aim for Break-Even (No Refund, No Balance Due)

Some prefer to strike a balance, so they neither owe nor receive much at tax time.
✅ Pro: Keeps money in your control without the risk of owing.
❌ Con: Requires accurate projections and ongoing adjustments.

Which Approach Is Right for You?

The “best” strategy depends on your financial discipline:

• If you’re a saver, adjusting for a break-even point may work best.
• If you struggle with saving, a larger refund might serve as a forced savings method.
• If you’re unsure, consulting with a tax advisor ensures your withholding matches your financial goals.

✅ The Bottom Line

Adjusting your withholding is more than just a paycheck choice—it’s a financial strategy. Whether you prefer a big refund, higher monthly income, or break-even, the key is to make an intentional decision that supports your long-term wealth-building goals.

About the Author

Dr. Jose G. Cardenas is a retired U.S. Army Finance Officer and the Chief Tax Strategist at The C & R Group, LLC. With a Doctorate in Business Administration and over 20 years of experience in financial strategy, tax planning, and life insurance, Dr. Cardenas helps individuals and business owners protect their wealth and build a legacy. Learn more at www.thecrgroupllc.com.

📌 Disclosure:
This article is for educational and informational purposes only and is not intended to serve as personalized legal or investment advice. Dr. Jose G. Cardenas, DBA, provides tax advisory services through The C & R Group, LLC. Insurance strategies, including Indexed Universal Life (IUL) and annuity products, may be offered through his role as a licensed financial professional affiliated with Experior Financial Group.

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